What Economists Are Saying Ahead of December's U.S. Jobs Report

What Economists Are Saying Ahead of December's U.S. Jobs Report

Job growth at this pace is a sign that the economy will continue to expand for a 10th straight year, even if overall growth slows somewhat because of the waning stimulus from President Donald Trump's tax cuts.

The Labor Department says the unemployment rate rose slightly to 3.9 percent, but that reflected a surge in jobseekers- a positive for growth. The ADP report, which is jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment report for December scheduled for release on Friday.

A strong employment report could well keep the Federal Reserve on course to continue raising interest rate this year, deepening its rift with Wall Street and Trump, who has chastised the Fed and its chairman, Jerome Powell, repeatedly for its rate increases.

"The jump in payrolls in December would seem to make a mockery of market fears of an impending recession", said Paul Ashworth, chief economist at Capital Economics in Toronto. The annual increase in wages will, however, probably dip to 3.0% from 3.1% in November as the big increase in December 2017 drops out of the calculation.

Don't see the graphic above? Data for October and November were revised to show 58,000 more jobs added than previously reported.

Wage growth also picked up.

Several sectors saw a pickup in hiring.

Among the sectors and industries doing the most hiring last month were health care, food service, construction, manufacturing, and retail. Builders added 38,000 construction jobs, while manufacturers increased their payrolls by 32,000 workers.

Hiring has been unusually strong as the unemployment rate has fallen to 3.7 per cent - a 49-year low - from 4.1 per cent at the start of 2018.

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The S&P 500 suffered its worst December since the Great Depression and tumbled on Thursday after Apple Inc slashed its holiday-quarter revenue forecast saying sales in China slowed more than expected. The White House's protectionism has lead to a trade war with China and tit-for-tat tariffs with other trading partners, including the European Union, Canada and Mexico.

The ripple effects from slower growth overseas could eventually hurt the US economy, David Dollar, a senior fellow at the Brookings Institution, told NPR's Scott Horsley.

During the first 11 months of 2018, employers added 2.27 million jobs, or an average of 206,182 a month, according to the Labor Department.

Still, consumer confidence slid in December, the Conference Board said.

The expected continuation of steady job growth suggests that such risks might be - for the moment, anyway - overblown. The government shutdown, if it extends beyond next week, could weigh on January payrolls.

Citigroup's measure of how key economic indicators are faring versus economists' forecasts is at its most negative in 16 months.

The increase potentially reflects filings from workers affected in the first week of the shutdown, which has caused the furlough of an estimated 350,000 federal employees.

"Yes, the nation's unemployment rate rose to 3.9%, but for the best of reasons", said Mark Hamrick, senior economic analyst.